COARSE GRAINS: U.S. corn ending stocks for 2010/11 are projected 70 million bushels
lower this month with higher expected food, seed, and industrial use. Corn used for ethanol is
projected 50 million bushels higher on a higher-than-expected November final ethanol
production estimate and weekly ethanol data that indicate record output for December and
Rising corn prices have reduced spot margins relative to variable costs to breakeven levels in recent weeks; however, ethanol blender incentives remain in place and export
demand prospects remain strong with sugar-based ethanol uncompetitive at current sugar
prices. Corn costs for many ethanol producers and other end users may also be below spot
values to date as a substantial portion of this year’s crop appears to have been forward priced.
The continuing wide spread between reported monthly prices received by producers and
substantially higher cash market bids can be explained by farmer deliveries of corn priced last
year when prices were well below current levels.
Corn food, seed, and industrial use is also projected higher for 2010/11 due to rising prospects
for production of sweeteners and starch. Corn used to produce high fructose corn syrup
(HFCS) is projected 15-million-bushels higher reflecting strong shipments of the corn-based sweetener to Mexico. Demand for HFCS has grown in Mexico as sugar exports to the United States have increased. Corn used for starch is also raised 5 million bushels based on the
improving outlook for industrial output in the United States.
Ending corn stocks for 2010/11 are projected at 675 million bushels. This month’s projections
lower the stocks-to-use ratio to 5.0 percent, the same as in 1995/96—the last time ending
stocks fell to multi-year lows. Corn prices rose sharply in the spring and summer of 2006 to
ration usage ahead of the 2006 harvest. The 2010/11 marketing-year average farm price is
projected at $5.05 to $5.75 per bushel, up from $4.90 to $5.70 per bushel last month.
Global 2010/11 coarse grain supplies are projected 4.4 million tons lower this month with
smaller beginning stocks and production. Coarse grain beginning stocks are reduced 2.4
million tons mostly reflecting lower corn carryin in Brazil and lower barley carryin in Saudi
Arabia. Higher 2009/10 corn exports for Brazil and lower 2009/10 barley imports for Saudi
Arabia drive these changes in 2010/11 supplies. Global 2010/11 corn production is lowered
1.8 million tons with reductions for Argentina and Mexico. Argentina production is lowered 1.5
million tons as continued dryness through mid-January further reduced yield prospects in the
country’s central growing areas. Mexico production is lowered 0.5 million tons on lower
reported area. Partly offsetting are small increases for the Philippines and Zimbabwe. Corn,
barley, and rye production are all lowered slightly for Ukraine based on the latest government
Changes in global 2010/11 coarse grain trade are mostly offsetting. Corn exports are reduced
1.5 million tons for Argentina with the smaller crop. Corn exports are raised 0.3 million tons for
Canada and 0.1 million tons for Paraguay. Corn imports are reduced for South Korea and
Mexico, but raised for EU-27. South Korea corn imports are reduced an additional 0.5 million
tons this month as efforts to contain the recent outbreak of foot-and-mouth disease further
reduce feed demand. Barley exports are raised 0.3 million tons for Canada with a similar
increase in imports projected for Saudi Arabia. Global corn consumption is raised slightly,
mostly reflecting the increase in food, seed, and industrial use in the United States. Corn
feeding is raised for EU-27, but lowered for Canada and South Korea. Global corn ending
stocks for 2010/11 are projected 4.5 million tons lower with most of the decrease in Brazil and
the United States.